Kangaroo updates due diligence, completion process for Pakar project

International coal producer Kangaroo Resources Limited (KRL) and its strategic alliance partner, leading Indonesian coal conglomerate PT Bayan Resources provide on Tuesday the following joint statement to update the market on the progress of due diligence and the completion process for the transaction announced on 28 December 2010.

Under this agreement, KRL is acquiring the Pakar Thermal Coal Project in East Kalimantan in exchange for shares.

KRL and Bayan entered into an agreement in December 2010, whereby the companies would start to work together immediately to promote operational efficiencies, synergies and other advantages to build up Kangaroo?s Indonesian coal business as quickly as possible. This work has already commenced in good faith with technical and operational work underway on many fronts to advance the Kangaroo assets.

In parallel, the two parties also commenced due diligence and other completion requirements to allow for Bayan first to acquire and then to vend, the Pakar Coal Project into Kangaroo. This due diligence exercise has now been completed from Kangaroo?s perspective.

Initially it was perceived that there would be a shortened period for the two companies to conduct their due diligence and associated requirements for completion; however, regulatory controls associated with the two companies being listed in different markets have ultimately dictated that the process be more stringent. In particular the requirement of audited accounts to 31 Dec 2010 and the transfer of local Indonesian companies holding the Pakar concessions to entities that can be foreign-controlled have both taken more time to complete than previously anticipated.

None of these requirements are of concern and each is proceeding with the full support and contribution of parties on both sides.

The two companies wish to stress that the due diligence process is proceeding smoothly and both Kangaroo and Bayan are comfortable that completion of the deal will take place as anticipated. The transaction completion process from this point is targeted as follows:

* 31 March - complete outstanding issues relating to the regulatory process associated with due diligence;

* 30 April - complete Independent Experts? Reports for shareholder notices of meetings. Issue notices of meetings for both companies; and

* 31 May - conduct shareholder meetings to approve the transaction.

In the meantime, operational work and cooperation will continue with Bayan playing a major role in the ramp-up of production at the Mamahak Coking Coal Project and preparatory work for both the Pakar and GPK Projects to move into production during 2011. (kanti)